Business Ethics 1

TRUSTEESHIP MANAGEMENT Gandhian Philosophy of Wealth Management Trusteeship, as applicable to the corporate world, refers to the act of holding and managing resources on behalf of the stakeholders of the firm.

TRUSTEESHIP MANAGEMENT Gandhian Philosophy of Wealth Management Gandhian Philosophy of wealth management is based on the ‘Servodaya’ principles of Truth, Non-Violence and Trusteeship; wherein harmony between labour and management reigns supreme. According to Gandhiji, managers and proprietors of business firms are only the trustees of wealth of society. The idea of trusteeship advocated by Gandhiji, is based on and has its origin in the Bhagaved Gita-in the principles of ‘aparigraha’ (non-possession) and ‘Sambhawa’ (equalism) which were followed by Mahatma Gandhi. Gandhiji’s motto was ‘greatest good of all’.

Gandhiji’s views on labour management relations My ideal is that capital and labour should supplement and help each other. They should be a great family living in unity and harmony; capital not only looking to the material welfare of the labourers, but their moral welfare also-capitalists being trustees of the welfare of the labouring classes under them.

Gandhiji’s views on labour management relations Gandhiji assigned a paternalist role to management in their dealings with labour Gandhiji considered trade unions to be means of workmen’s material and moral development. He declared that a strike is an inherent right of the working man for the purpose of securing justice, but they must be considered a crime immediately if the capitalists accepts the principle of arbitration. If conflict arises between labour and management, the weapon proposed by Gandhiji is Satyagraha

Gandhiji’s principle of Trusteeship Trusteeship principle is foundation of philosophy of wealth management Principles of Trusteeship No recognition to right to individual property Resources must be held and utilised for the benefit of society. Management is the trustees of the stakeholders and must work towards optimising stakeholder value, not merely maximising shareholder value

Gandhiji’s principle of Trusteeship In case of industrialist what they produce should be determine by social necessity with optimal utilization of scarce resources and not by personal whims Though wealth legally belongs of owners of business, morally belongs to society and community.

Politics without principles Education without character Seven greatest Sins Politics without principles Education without character Commerce without morality Pleasure without conscience Wealth without work Science without humanity Worship without sacrifice

Indian Corporate Leaders and Trusteeship Infosys, particularly from its former CEO , Narayana Murthy for creating this company along with a small group of people (better sharing of wealth in society), the involvement of employees in the company’s fortunes (through ESOPs) and his contentment with a mere 7% of company stock (he prefers it that way) reflect a deep-rooted commitment towards trusteeship. House of the Tatas with their corporatized initiatives for socio-corporate benefits “WIPRO Cares” Foundation, with a targeted corpus of Rs 100 crore for primary education; Birla foundation with its focus on socio-economic improvement in the lives of the people touched by the corporation.

Social & Economic Responsibilities of Business

Meaning of CSR By the term ‘Corporate Social Responsibility’ (CSR) what is generally understood is that business has an obligation to society that extends beyond its obligation to its shareholders or owners.

Definition of CSR CSR means operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that the society has of business”. The World Business Council for Sustainable Development defines CSR as: “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”.

To whom Business Organizations are responsible????? Primary Stakeholders Secondary Stakeholders

Relations between a business firm and its primary stakeholders Stockholders Employees (Unions) Wholesalers (Retailers) Distribute products Sell labor Invest capital Creditors Business firm (Managers) Buy products Lend money Customers Suppliers Sell materials

Relations between a business firm and some of its other (secondary) stakeholders General Public Central/State and Local Governments Local Communities Positive, negative opinion Jobs, environment Regulation, taxes Business Support Groups Governments Business Firm (Managers) Advice, research Friendly, hostile Image, publicity Media Social Activist Groups Social demands

How Does CSR benefit Business??? Reputation Less Law Suits Loyal Employees & Customers Less Media Harassment Access to Capital Improves Improves Productivity Community Goodwill Better Environment

DIFFERENCE GOOD COMPANY Excellent Products & Services GREAT COMPANY Makes the world a better place